Business Opportunity Zone
What is an Opportunity Zone?
OZ’s are an economic development tool, designed to spur economic development and job creation in economically distressed communities where new investments, under certain conditions, are eligible for preferential tax treatment.
New Castle qualifies as an OZ because we have been nominated for that designation and that nomination has been certified by the Secretary of the U.S. Treasury via his delegation of authority to the Internal Revenue Service. The 2017 federal “Tax Cuts and Jobs Act” established the new IRS Code Section 1400Z- Opportunity Zones, which offers three tax incentives for investing capital gains in low-income communities through a Qualified Opportunity Fund (QOF).
New Castle has created a QOF which is an investment vehicle that is set up and located within an OZ where investors, with Capital Gains, work with these Opportunity Funds to invest in OZ’s.
What Happens to Capital Gains Invested into a QOF
- You receive a temporary deferral of inclusion in taxable income for Capital Gains reinvested into our QOF. 1
- You also receive a step-up in basis for capital gains invested in our Opportunity Fund. 2
- You also receive a permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in our QOF. 3
Opportunity Zones are an excellent way for individuals and organizations to invest in our community and help with the Revitalization of our Business and Industrial Districts as well as Local Neighborhoods. Contact our offices @ (724)656-3510 to schedule an appointment to explore how you can get involved with the City of New Castle’s Opportunity Zone!
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1 Deferred gain must be recognized on the earlier of the date on which the opportunity zone investment is disposed of or December 31, 2026.
2 The basis is increased by 10%, if the investment in the Opportunity Fund is held by the taxpayer for at least 5 years and by an additional 5% if held for at least 7 years, thereby excluding up to 15% of the original gain from taxation.
3 If the investment is held for at least 10 years. This exclusion only applies to gains accrued after an investment in an Opportunity Fund.